Calculation Method 1 for Years Vacant (Forecasted Amount for Years 7 through 10)=
The system uses this setup information for this calculation:
Area of Unit: 10,000.
Market Rate New (from assumption header): 10.00.
Growth Pattern (from assumption header): FIXED.
New Rate (from assumption detail): 3.00.
Term of Assumption: 4 years.
After the real estate lease expires, the system uses the assumption that is assigned to the unit to forecast the rent, which is in effect for 4 years (2008 through 2011). The system multiplies the area of the unit by the new market rate from the assumption header, which is an amount per square foot, to determine the base amount to which to apply the growth pattern.
The equation is: (Area of Unit) × (New Market Rate) = (Base Amount)
For example: 10,000 × 10.00 = 100,000
Next, the system compounds (accumulates) the amounts from the growth pattern in the assumption header for the first seven years before adding the result to the base amount. The system uses the resulting new base amounts instead of the recurring billing amounts that the system uses when the unit is leased.
This table provides examples regarding how the system compounds the amounts when using calculation:
Year |
Growth Pattern FIXED Compounded |
Calculation for New Base Amount |
|---|---|---|
7 |
1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000= 28,000 |
100,000 + 28,000 = 128,000 |
8 |
1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000+ 8,000 = 36,000 |
100,000 + 36,000 + 136,000 |
9 |
1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000+ 8,000 + 9,000 = 45,000 |
100,000 + 45,000 + 145,000 |
10 |
1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000+ 8,000 + 9,000 + 10,000 = 55,000 |
100,000 + 55,000 + 155,000 |
After the system calculates the new base amount for each year, it sums the amounts and multiplies the result by the new rate from the assumption detail to derive the total forecasted amount for years 7 through 10: 128,000 + 136,000 + 145,000 + 155,000 = 564,000564,000 × 0.03 = 16,920 (forecasted rent amount for years 7 through 10)
The system updates the total forecasted amount to the first period of the first year that the assumption is effective in the F15L109 table. In this example, the system updates the total forecasted amount to period 01 of 2008.